Keele University
Statement of Accounting Policies ( continued ) For the year ended 31 July 2021
Accounting for retirement benefits ( continued )
Universities Superannuation Scheme
The University participates in the Universities Superannuation Scheme ( the scheme ). The assets of the scheme are held in a separate trusteeadministered fund . Because of the mutual nature of the scheme , the assets are not attributed to individual institutions and a scheme-wide contribution rate is set . The University is therefore exposed to actuarial risks associated with other institutions ’ employees and is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis . As required by Section 28 of FRS 102 “ Employee benefits ”, the University therefore accounts for the scheme as if it were a wholly defined contribution scheme . As a result , the amount charged to the Statement of Comprehensive Income and Expenditure represents the contributions payable to the scheme . Since the University has entered into an agreement ( the Recovery Plan ) that determines how each employer within the scheme will fund the overall deficit , the University recognises a liability for the contributions payable that arise from the agreement ( to the extent that they relate to the deficit ) with related expenses being recognised through the Statement of Comprehensive Income and Expenditure .
Keele Superannuation Scheme
The University operates the KSS providing benefits based on final pensionable pay for those staff who were both still members of the Scheme on 31 December 2013 and employed by the University upon retirement . All other members benefits being based on upon pay at the date of leaving KSS or the University revalued by CPI to the date of becoming a pension member . The assets of the scheme are held separately from those of the University . The scheme is closed to future accrual . Pension scheme assets are measured using market values . The Scheme is contracted out of the State Second Pension ( S2P ).
Annually the University engages independent actuaries to calculate the obligation for KSS . The present value is determined by discounting the estimated future payments at a discount rate based on market yields on high quality corporate bonds denominated in sterling with terms approximating to the estimated period of the future payments .
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income . These amounts together with the return on plan assets , less amounts included in net interest , are disclosed as actuarial gains and losses . The cost of the defined benefit plan , recognised in expenditure as staff costs , except where included in the cost of an asset , comprises the increase in pension benefit liability arising from employee service during the period and the cost of plan introductions , benefit changes , curtailments , and settlements . The net interest cost is calculated by applying the discount rate to the net liability . This cost is recognised in expenditure as a finance cost .
Others
The University participates in the Local Government Pension Scheme (“ LGPS ”). This is a defined benefit scheme which is externally funded . The assets of the LGPS are measured using closing market values .
Annually the University engages independent actuaries to calculate the obligation for LGPS . The present value is determined by discounting the estimated future payments at a discount rate based on market yields on high quality corporate bonds denominated in sterling with terms approximating to the estimated period of the future payments .
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income . These amounts together with the return on plan assets , less amounts included in net interest , are disclosed as actuarial gains and losses . The cost of the defined benefit plan , recognised in expenditure as staff costs , except where included in the cost of an asset , comprises the increase in pension benefit liability arising from employee service during the period and the cost of plan introductions , benefit changes , curtailments , and settlements . The net interest cost is calculated by applying the discount rate to the net liability . This cost is recognised in expenditure as a finance cost .
A small number of staff are also in the NHS pension scheme . The amount charged to the Statement of Comprehensive Income and Expenditure represents the contributions payable to the scheme in respect of the accounting period .
8 . Employment benefits
Short term employment benefits such as salaries and compensated absences are recognised as an expense in the year in which the employees render service to the University . Any unused benefits are accrued and measured as the additional amount the University expects to pay as a result of the unused entitlement .
9 . Leases Finance leases
Leases in which the University assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases . Leased assets acquired by way of a finance lease and the corresponding lease liabilities are initially recognised at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception of the lease .
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability . The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability .
Assets held under finance leases are depreciated over the shorter of the lease term or the useful economic lives of equivalent owned assets .
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